High-end PC VR (Oculus, HTC Vive, others) will offer the best VR experience to early adopters next year, but CPU/GPU requirements will price it beyond average consumers. Moore’s Law and a flagging PC market searching for growth could bring this within reach of mass consumers by 2017.

Mobile VR (with dozens of startups) and Sony’s PlayStation VR for console will create the first broad VR consumer market in 2016. However, we might need to wait for the second generation of mobile VR with full positional tracking (discussed below) in 2017/2018 for it to become a true mass market.

(Note: Parent companies only included with acquisitions, e.g., Facebook/Oculus).

Enterprise AR 1.0

We guided the discussion to how AR could disrupt mobile and become four times larger than VR by 2020. Because VR is currently 12-18 months ahead of AR in consumer market readiness, AR players are focused primarily on enterprise markets for 2016. Leaders like Microsoft and ODG are working with enterprise and government customers before consumer AR emerges going into 2017.

New Year’s Resolution

Digi-Capital’s AR/VR technical benchmarking found a current best-in-class field of view for VR, hitting a whopping 136 degrees diagonally per eye. As anything over 90 degrees provides an immersive experience, that’s wickedly huge. With that delivered, increasing screen resolution will become a major VR battleground next year (although Oculus and others are already solving the screen door effect).

Strap on your magic goggles, it’s immersion time.

AR has already produced very high resolution from leaders like ODG, but one battleground for AR next year will be field of view. Most AR (like HoloLens) is currently in the standard range of 20-40 degrees diagonally, which is enough for mobile computing. Large (40-90 degrees) fields of view will begin to emerge for entertainment in 2016, but we might need to wait a little while for the industry to take us over the magical 90 degree mark for immersive Mixed Reality — this is AR’s Everest.

Light Field Of Dreams

AR’s first commercial “digital light field” could become available in 2016, although that might drift into the following year. What is a “light field”? The real-world analog equivalent is all the light rays at every point you can see travelling in every direction. In other words, a four-dimensional way of describing what your eyes see in the real world — 3 dimensions (for X, Y and Z positions), and a fourth dimension for direction. You see light fields every time you open your eyes.

A digital light field simulates its analog cousin by providing at least 5 digital light field arrays. So, for every point of light in space that the user can see, at least 5 additional direction dimensions are presented to the eye.

This convinces users’ eyes and brains that the virtual objects they are shown in the world around them are real (for Mixed Reality). The digital light field prototypes I have seen already do a convincing job of simulating an analog light field, and Magic Leap is not the only company doing this (although it is the best funded).

Location, Location, Location

Rotational tracking (where you’re looking) is standard across VR, but high-end spatial tracking (where your head is) and hand tracking (where your hands are) can take VR from an ambient to immersive experience to make you feel like you’re really there (“presence” in industry-speak).

Cinematic VR could end up having more in common with Grand Theft Auto than Driving Miss Daisy.

The best spatial tracking at room scale will come from HTC Vive and Lighthouse, with Oculus, PlayStation VR and others doing similar things in smaller spaces. PC/console VR hand tracking will be mostly controller-based next year, with Oculus Touch an excellent solution. Leap Motion and others will be working on taking “hands-free” hand tracking mainstream.

Mobile VR generally hasn’t conquered spatial tracking yet, because of limited smartphone sensors. Google’s Project Tango has solved the problem, and smartphone manufacturers are keenly aware. Spatial tracking will come to mobile VR, but it might take until 2017 for this to go mainstream.

While the VR-installed base grows, wunderkind directors must learn how to tell linear stories in a non-linear medium. Cinematic VR could end up having more in common with Grand Theft Auto than Driving Miss Daisy.

Reality Apps 1.0

AR/VR games and video are fantastic for bringing early adopters into the market, but a broader set of apps is needed. This is particularly important for AR as a general-purpose computing platform.

At Eyetouch Reality and elsewhere, startups will begin to disrupt reality next year with new applications types only possible in AR/VR. Solving the hardware challenge is crucial, but compelling apps will transform AR/VR from promising technology to indispensable platform.

You can find out more about where the industry is headed in Digi-Capital’s Augmented/Virtual Reality Report here.